[Click eStock] "Hyundai Construction, Sales Recovery in Second Half"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained its 'Buy' rating and target price of 70,000 KRW for Hyundai Engineering & Construction on the 2nd, expecting sales to recover as domestic and overseas projects begin in earnest from the second half of the year.

Lee Minjae, a researcher at NH Investment & Securities, said, "Both new orders (targeting 25.4 trillion KRW this year) and pre-sales (over 50,000 units this year) are proceeding as planned, and performance improvement is expected with the full-scale sales of domestic and overseas projects in the second half. This is a phase where growth in independent construction fields such as offshore wind power and nuclear power generation is beginning in earnest," he analyzed.

Major new orders for Hyundai Engineering & Construction in the second quarter include the Quang Tri 1 Power Plant Project in Vietnam (900 billion KRW), Paju Unjeong Complex Facility (1.2 trillion KRW), Sihwa MTV Bandalseom Residential Accommodation Facility (900 billion KRW), Gwangmyeong District 11 (500 billion KRW), and Hwaseong Bongdam Nari District (500 billion KRW). The researcher added, "Additionally, the extension of the contract period for the Saudi Majan Project (1 year and 6 months) will offset overseas business issues caused by COVID-19."

Second-quarter performance is expected to meet market consensus. NH Investment & Securities estimated Hyundai Engineering & Construction's consolidated sales for the second quarter at 4.2 trillion KRW, down 6.7% year-on-year, and operating profit at 214.6 billion KRW, up 39.5%. The researcher explained, "Overseas business sales in the second quarter are similar to those in the first quarter, but large sites will begin in earnest from the second half and grow. Domestic housing will also see a full recovery in progress rates of large sites such as Gaepo Jugong and Dunchon Jugong."

Considering the growth potential of Hyundai Engineering & Construction's subsidiaries, NH Investment & Securities maintained it as the top pick in the construction sector. The researcher said, "The price-to-earnings ratio (PER) of 15 times applied in calculating the target price for 2021 is higher than the industry average of 8 times, but considering the Hyundai Engineering listing issue and the growth potential of Hyundai Steel Industry, it remains attractive."

This content was produced with the assistance of AI translation services.